Monday, April 20, 2015

Added shares of Pacific Coast Oil Trust, Johnson & Johnson

Last week I added shares of both Johnson & Johnson (NYSE: JNJ) and Pacific Coast Oil Trust (NYSE: ROYT).

Let me begin with my rationale for buying the latter. I added shares of ROYT because prices at $4 per share, the distribution yield on that should be around 30% when Brent recovers to $80. I say when, not if. I calculated that by taking the distribution ROYT paid when Brent was still at $80. ROYT has about 13 years left in its reserve life, not including any new steamflood wells its parent company drills (in which ROYT would get a 25% revenue interest). The yield isn't much right now because of low oil prices, but I am willing to continue waiting on this one.

As for J&J, I can get a decent price on it so I did. As I've mentioned in previous journals, I need added diversification away from just energy. J&J is a good, dividend-focused way by which to do that. The yield is 2.8%, which is not bad, and the company trades at 16.5 trailing earnings. Again, not terrible. I'm willing to pick some up, and I did. Looking forward to those annual dividend increases. 

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